What's in Store for Medicare Part B Premiums

Medicare Part B premiums will continue to be $96.40 per month for most people in 2010, even though health-care costs are rising. That’s because most Medicare beneficiaries are protected by the “hold harmless” provision, which prevents Social Security checks from declining from one year to the next. Most people deduct their Part B premiums from their Social Security checks. There will be no cost-of-living increase to Social Security benefits in 2010, so their Medicare Part B premiums cannot increase, either. See A Bailout for Seniors for more information.

However, the hold-harmless provision does not apply to about 25% of Medicare beneficiaries -- including people who are new to Medicare in 2010, low-income beneficiaries whose premiums are paid by Medicaid, and high-income beneficiaries who pay a surcharge -- and their premiums could increase substantially. The Centers for Medicare and Medicaid Services recently announced that premiums for people who aren’t protected by the hold-harmless provision would jump by $14.10, to $110.50 per month, in 2010.

High-income beneficiaries will pay even more, which has been the case since 2007, when income surcharges were added to the Part B premiums for beneficiaries above a certain income level. In 2010, the extra charge applies to Medicare beneficiaries with modified adjusted gross incomes of $85,000 or more ($170,000 or more if married filing jointly).

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In 2010, people who earn more than $85,000 up to $107,000 (or married couples filing jointly who earn more than $170,000 up to $214,000) will pay $154.70 per month per person for Part B; people who earn more than $107,000 up to $160,000 ($214,000 up to $320,000 if filing jointly) will pay $221.00 per month per person; people who earn more than $160,000 up to $214,000 ($320,000 to $428,000 if filing jointly) will pay $287.00 per month per person; and those who earn more than $214,000 (more than $428,000 if filing jointly) will pay $353.60 per month per person. (See this table on the Medicare Web site for 2009 premiums.)

This big price hike may be tough to stomach in a year when Social Security payments won’t rise with inflation. The House of Representatives passed a bill on September 24 that would freeze Medicare Part B premiums at 2009 levels for everyone in 2010 -- even those who aren’t protected by the hold-harmless provision. High-income beneficiaries would still have to pay a surcharge, but their total costs would continue at 2009 levels, too (ranging from $134.90 to $308.30, depending on income, for single Medicare beneficiaries who earned more than $85,000, or more than $170,000 if married filing jointly). The Senate has not acted yet, although time is running out to make changes in time to adjust the first Social Security checks of 2010.